Crucial Takeaways From Berkshire Hathaway’s 2022 Earnings And Buffett’s Annual Letter

Berkshire Hathaway’s (BRK/A, BRK/B) fourth-quarter earnings release also includes the annual letter from Warren Buffett as part of the annual report. The yearly letter continued the theme from last year as a type of owner’s handbook for Berkshire shareholders. Buffett noted that he and Charlie Munger do two main things at Berkshire. First, invest in operating businesses, usually by owning 100%. This review will focus on the performance of these operating businesses controlled by Berkshire Hathaway
BRK.B
. Second, buy non-controlling stakes in publicly traded stocks. An analysis of Berkshire’s publicly traded holdings is here. Buffett also noted that shareholders should focus on Berkshire’s operating earnings rather than the volatile GAAP results. He also took particular aim at those blindly deriding corporate stock repurchases. He unequivocally stated, “Gains from value-accretive repurchases, it should be emphasized, benefit all owners – in every respect.”

Berkshire Hathaway reported a gain of almost $18.2 billion in the fourth quarter versus a profit of over $39.6 billion in the same quarter of 2021. This gain broke the string of bottom-line losses thanks to the fourth-quarter rebound in the stock market since results are heavily impacted by gains or losses from the investment portfolio, with unrealized losses from their portfolio included in earnings. Operating earnings, which remove the distortion from market changes and better reflect the firm’s earnings power, fell by 8% for the quarter versus 2021. The 2022 calendar year operating earnings rose 12% over the same period in 2021. Providing an illustration of the value from share repurchases, per-share operating income for 2022 increased by 15% versus 2021.